[Reporter’s Notebook] The 2nd Supplementary Budget Going 'Yeongkkeul'

[Asia Economy Reporter Jang Sehee] The ruling and opposition parties have increased the size of this year's second supplementary budget (추경) by 1.9 trillion won compared to the government's proposal. This reflects the spending pressures in various areas such as an 88% expansion of the 국민지원금 (National Support Fund) and an increase in support funds for the Small Business Hope Recovery Fund, while also maintaining the initially promised 2 trillion won for national debt repayment.

The additional funds were secured not only by reducing some projects but also by reallocating 900 billion won from the Small Business Promotion Fund, 400 billion won from decreased bond interest, and 600 billion won from differences in contract and bid prices.

Choosing to reallocate existing resources instead of the easier method of issuing national bonds is positive for now, but the decision to withdraw funds again from a fund with a specific purpose remains a concern. The government plans to procure 900 billion won from the Small Business Promotion Fund, which is intended for low-interest loan programs for small business owners. Essentially, the government is giving cash that should have gone to small business owners anyway. If high-intensity social distancing continues due to the 4th wave of the pandemic, the financial capacity of the fund may be depleted.

The Foreign Exchange Stabilization Fund, which is operated to maintain the stability of the national currency and to prevent manipulation of foreign exchange trading, is also a source of funds. Given the increasing global economic uncertainties such as the US-China trade conflict, the role of the stabilization fund is important. Moreover, losses incurred from this fund must be covered by the global surplus.

All the interest savings generated from the difference in interest rates for government bonds are also being used up. The government saved 430 billion won in the first half of the year due to low interest rates but utilized these savings for the first and second supplementary budgets, leaving no balance. The government usually keeps some budget for national bond interest repayment as a buffer considering the country's credit rating, but there is no such buffer this year.

However, a bigger problem is the uncertainty over whether the funds gathered from various sources will be used meaningfully. The budget for cashback projects, which cannot be implemented immediately due to the 4th wave, is still included, and disaster relief funds are being paid to the middle class and above. There is suspicion that the scale was increased merely due to political demands.

This content was produced with the assistance of AI translation services.